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                                                       Calendar No. 328
110th Congress                                                   Report
                                 SENATE
 1st Session                                                    110-143

======================================================================



 
               BLINDED VETERANS PAIRED ORGAN ACT OF 2007

                                _______
                                

                 August 3, 2007.--Ordered to be printed

                                _______
                                

   Mr. Akaka, from the Committee on Veterans Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 1163]

    The Committee on Veterans' Affairs (hereinafter, ``the 
Committee''), to which was referred the bill (S. 1163) to amend 
title 38, United States Code, to improve compensation and 
specially adapted housing for veterans in certain cases of 
impairment of vision involving both eyes, and to provide for 
the use of the National Directory of New Hires for income 
verification purposes, having considered the same, reports 
favorably thereon with an amendment in the nature of a 
substitute, and recommends that the bill, as amended, do pass.

                              Introduction

    On April 19, 2007, Committee Chairman Daniel K. Akaka 
introduced S. 1163 with Senators Sherrod Brown, Russell 
Feingold, Chuck Hagel, Johnny Isakson, and Jim Webb as original 
cosponsors. Senator Bernard Sanders was added later as a 
cosponsor. S. 1163, as introduced, would amend the eligibility 
criteria for disability compensation and specially adapted 
housing in certain cases of impairment of vision in both eyes, 
and authorize the Secretary of Veterans Affairs to use the 
National Directory of New Hires for income verification 
purposes. The bill was referred to the Committee.
    On May 2, 2007, Ranking Member Larry Craig introduced S. 
1266. Senator Johnny Isakson was added later as a cosponsor. S. 
1266 would increase assistance for veterans interred in 
cemeteries other than national cemeteries.
    On May 8, 2007, Senator Christopher Dodd introduced S. 1334 
with Senators Sherrod Brown, Robert Byrd, Kent Conrad, John 
Kerry, and George Voinovich as original cosponsors. Senators 
Tim Johnson, Joseph Lieberman, and Blanche Lincoln were added 
later as cosponsors. S. 1334 would make permanent the authority 
to furnish government headstones and markers for graves of 
veterans interred at private cemeteries.

                           Committee Hearing

    On May 9, 2007, the Committee held a hearing on benefits 
legislation at which testimony on S. 1163, S. 1266, and S. 
1334, among other bills, was offered by: Daniel L. Cooper, 
Under Secretary for Benefits, Department of Veterans Affairs; 
Carl Blake, Senior Associate National Legislative Director, 
Paralyzed Veterans of America; Eric A. Hilleman, Assistant 
Director, National Legislative Service, Veterans of Foreign 
Wars of the United States; Brian E. Lawrence, Assistant 
National Legislative Director, Disabled American Veterans; and 
Alec S. Petkoff, Assistant Director, Veterans Affairs and 
Rehabilitation, The American Legion.

                           Committee Meeting

    On June 27, 2007, the Committee met in open session to 
consider legislation pending before the Committee. Among the 
measures so considered was S. 1163 with an amendment in the 
nature of a substitute incorporating provisions from S. 1266 
and S. 1334. By voice vote the Committee voted to report 
favorably S. 1163, as amended, to the Senate.

                     Summary of S. 1163 as Reported

    S. 1163, as reported (hereinafter, ``Committee bill'') is 
titled the ``Blinded Veterans Paired Organ Act of 2007.'' The 
Committee bill is summarized below.

                  TITLE I--LOW-VISION BENEFITS MATTERS

    Section 101 would modify the eligibility criteria for 
special monthly compensation in certain cases involving 
disability due to visual impairment.
    Section 102 would amend the eligibility criteria that 
qualifies veterans to receive compensation for a service-
connected disability due to blindness in both eyes although the 
visual impairment in only one of the eyes is, in fact, service-
connected.
    Section 103 would direct the Secretary of the Department of 
Veterans Affairs (hereinafter, ``VA'') and the Secretary of the 
Department of Health and Human Services (hereinafter, ``HHS'') 
to match and compare VA needs-based pension benefits data, 
parents' dependency and indemnity compensation data, health-
care services data, and unemployability compensation data with 
the National Directory of New Hires maintained by HHS, for the 
purpose of determining eligibility for such VA benefits and 
services.

             TITLE II--BURIAL AND MEMORIAL AFFAIRS MATTERS

    Section 201 would require the Secretary to design and 
furnish a medallion or other emblem, upon request, signifying a 
deceased veteran's status to be affixed to headstones or 
markers purchased at private expense.
    Section 202 would repeal the current two-year window within 
which States must file for reimbursement from VA for the 
interment or inurnment of unclaimed remains of deceased 
veterans. It would also authorize $5 million to cover the 
operational and maintenance expenses of State cemeteries.
    Section 203 would make permanent the authority to furnish 
government headstones and markers for privately-marked graves 
of veterans interred at private cemeteries. It would also 
include retroactive authority to do the same for those interred 
on or between November 1, 1990 and September 10, 2001.

                       Background and Discussion


                  TITLE I--LOW-VISION BENEFITS MATTERS

Section 101. Modification of rate of reimbursement of visual impairment 
        for payment of disability compensation

    Section 101 of the Committee bill would change the 
definition of blindness used for subsection (o) of section 
1114, title 38, United States Code, to that commonly used in 
the United States.
    Under current law, veterans with very serious disabilities 
are eligible to receive additional benefits (often referred to 
as ``special monthly compensation,'' 38 C.F.R. 3.350) which are 
often higher than the rate paid to veterans who are totally and 
permanently disabled. Subsection (o) of section 1114 of title 
38, United States Code, provides benefits of $4,313 per month 
for single veterans who have multiple severe disabilities. 
Under subsection (o), a veteran who has bilateral deafness 
(rated service-connected at 60 percent in one or both ears) and 
also service-connected blindness with visual acuity of 5/200 or 
less, is paid at the rate of $4,313 per month.
    Subsection (o) of section 1114, title 38, United States 
Code, is derived from The United States Veterans' 
Administration Schedule for Rating Disabilities (March 20, 
1933) where it was referred to as ``special monthly pension.'' 
Under that rating schedule, including subsection (o), benefits 
for blindness were based on the veteran ``having only light 
perception.'' In 1945, subsection (o) was amended by Public Law 
79-182 to provide special monthly compensation for veterans who 
had multiple disabilities, including ``total blindness with 
visual acuity of 5/200 or less.'' The 5/200 standard for 
blindness has been continued in subsection (o) to the present 
day.
    According to the National Eye Institute, visual acuity is 
defined as the eye's ability to distinguish object details and 
shape with good contrast, using the smallest identifiable 
object that can be seen at a specified distance. It is measured 
by use of an eye chart and recorded as test distance/target 
size. Visual acuity of 5/200 means that an individual must be 5 
feet away from an eye chart to see a letter that an individual 
with normal vision could see from 200 feet.
    While VA has used the 5/200 or less standard of visual 
acuity for blindness over the last several decades, a consensus 
definition of what constitutes ``legal blindness'' has emerged.
    This consensus definition, which is less stringent than 
VA's standard, encompasses individuals with lesser degrees of 
vision impairment. The American Medical Association has 
espoused this definition since 1934 and defines blindness as a 
``central visual acuity of 20/200 or less in the better eye 
with corrective glasses, or central visual acuity of more than 
20/200 if there is a visual field defect in which the 
peripheral field is contracted to such an extent that the 
widest diameter of the visual field subtends an angular 
distance no greater than 20 degrees in the better eye.''
    The Social Security Administration (hereinafter, ``SSA'') 
changed its definition of blindness to the same standard as the 
American Medical Association in 1968. As of 1952, the Social 
Security Act defined blindness, in Public Law 82-590, as visual 
acuity of 5/200 or less. On January 2, 1968, Congress changed 
the definition of blindness in section 216 of the Social 
Security Act, Public Law 90-248. Section 216 states that the 
SSA considers an individual to be blind if he or she has 
``central visual acuity of 20/200 or less in the better eye 
with the use of a correcting lens.'' SSA also considers an eye 
with a peripheral field of vision of less than 20 degrees to 
equate to having a central visual acuity of 20/200 or less. 
This definition is widely used by state and federal governments 
today, but not VA.
    Section 101 of the Committee bill would provide that 
veterans who are very severely disabled as the result of 
blindness and other severe disabilities would be eligible to 
receive the higher rate of compensation provided under 
subsection (o) if their visual acuity in both eyes is 20/200 or 
less. The Committee believes that veterans who are so seriously 
disabled as to meet the visual acuity standard of 20/200 or 
less, in addition to the other statutory conditions needed to 
meet the criteria for an (o) rating under section 1114 of title 
38, United States Code, should receive those benefits.
    The provision would be effective for claims filed on or 
after the date of enactment.

Section 102. Improvement in compensation for veterans in certain cases 
        of impairment of vision involving both eyes

    Section 102 of the Committee bill, which is derived from S. 
1163, would establish a definition of blindness in section 
1160(a)(1) of title 38, United States Code, equivalent to that 
commonly used in the United States.
    In 1962, Public Law 87-610 was enacted requiring special 
consideration for certain veterans' disability compensation 
claims involving cases of blindness in both eyes or bilateral 
kidney dysfunction when disability in only one eye or kidney is 
adjudged by VA to have been tied to military service. This law 
allowed for veterans to be compensated as if the ``blindness in 
both eyes or such bilateral kidney involvement were the result 
of service-connected disabilities.'' This principle of ``paired 
organ'' impairment was extended to include ears in 1965 in 
Public Law 89-311 and hands, feet, and lungs in 1986 in Public 
Law 99-576.
    These legislative enactments demonstrate Congress' view 
that certain organs are designed to work together and warrant 
special consideration for compensation in cases where a veteran 
has disabilities in both organs, even if only one is service-
connected. Current law provides veterans who sustain a service-
connected injury or loss of function in one of these organs 
with eligibility for additional compensation should they 
sustain a non-service-connected injury or loss of function in 
the companion organ.
    In recent years, Congress has been active in updating the 
paired organ statute to address more adequately the 
disabilities that veterans face. In 2002, Congress enacted 
Public Law 107-330 that amended section 1160, title 38, United 
States Code, (hereinafter, the ``paired organ statute'') with 
respect to hearing loss. The original language of Public Law 
89-311 required that a veteran demonstrate ``total deafness'' 
in both the adjudged ear and the ear not affected by service in 
order to be eligible for compensation under the paired organ 
statute. Public Law 107-330 eliminated the ``total deafness'' 
requirement and allowed VA to consider partial hearing loss in 
either ear when adjudicating claims for deafness under the 
paired organ statute. Current law requires that a veteran have 
deafness rated at 10 percent or greater in the service-
connected ear in order to receive consideration under the 
paired organ statute.
    With respect to vision impairment, section 1160(a)(1) of 
title 38, United States Code, provides that a veteran with 
blindness in one eye as a result of a service-connected 
disability and blindness in the other eye as a result of a non-
service-connected disability that is not as a result of a 
veteran's own willful misconduct is eligible to receive the 
applicable rate of compensation as if both disabilities are 
service-connected. However, section 1160(a)(1) does not define 
the term ``blindness.'' In the absence of a statutory 
definition, VA has applied its own standard for vision 
impairment that amounts to ``blindness'' under the law--a 
visual acuity of 5/200 or less, a standard that equates to 
vision that is capable of light perception only.
    According to an estimate conducted in March 2007 by the 
Congressional Budget Office (hereinafter, ``CBO''), there are 
approximately 45,000 veterans receiving disability compensation 
primarily because of eye disease or impairment of vision, 1,150 
of whom would qualify for increased benefits if the visual 
acuity standard of the paired organ statute was amended.
    Future veterans who have sustained eye-related injuries in 
Operation Enduring Freedom and Operation Iraqi Freedom also 
stand to benefit from this legislation. As of June 2007, Walter 
Reed Army Medical Center reports having treated 534 soldiers 
from these operations for eye injuries. Of these soldiers, 428 
were treated for an injury to just one eye, meaning that any 
future vision problems are likely to be considered connected to 
service in only that one eye.
    It is the Committee's view that these individuals and other 
future veterans should not be denied benefits under the paired 
organ statute if they demonstrate a central visual acuity of 
greater than 5/200. Their vision impairment should be judged by 
the same standard that civilians are by the SSA.
    Section 102 of the Committee bill would define 
``blindness,'' as referred to in section 1160(a)(1), title 38, 
United States Code, as central visual acuity of 20/200 or less 
or peripheral field of vision of 20 degrees or less. This would 
eliminate the gap between the conventional definition of legal 
blindness in the United States and the definition of blindness 
heretofore used by VA in applying the paired organ statute.

Section 103. Use of National Directory of New Hires for income 
        verification purposes for certain veterans benefits

    Section 103 of the Committee bill, which is derived from S. 
1163, would authorize the Secretary to use the National 
Directory of New Hires (hereinafter, ``NDNH'') for income 
verification purposes.
    Under current law, certain benefits programs administered 
by VA, including pensions for wartime veterans and compensation 
for Individual Unemployability (hereinafter, ``IU''), are 
income based, meaning they are available only to beneficiaries 
whose annual income is below a certain level. Thus, VA must 
utilize certain income verification tools in order to ensure 
that those receiving benefits under its income-based programs 
are not earning a greater annual income than the law permits. 
One of the tools currently used by VA is the Internal Revenue 
Service's Income Verification Match (hereinafter, ``IVM'') 
module. Authority to use the IVM module expires on September 
30, 2008.
    A May 2006 Government Accountability Office (hereinafter, 
``GAO'') study, ``VA Should Improve Its Management of 
Individual Employability Benefits by Strengthening Criteria, 
Guidance, and Procedures,'' found that VA's process to enforce 
the earnings limit for ongoing eligibility for IU benefits is 
inefficient and ineffective. The study specifically identified 
a number of shortcomings of the IVM, including timeliness and 
efficiency. VA uses SSA earnings data that is about 1.5 years 
old, which can mean that, along with other processing delays, 
IU beneficiaries who earn an income above the threshold can 
continue to receive benefits for up to 2.5 years before VA 
determines they should be discontinued.
    GAO suggested that HHS' NDNH database, which provides a 
national directory of employment and unemployment insurance 
information to facilitate employment and income verification, 
could serve as an efficient complement to IVM. NDNH gathers its 
information from State Directories of New Hires, which are 
required to furnish NDNH with information regarding newly hired 
employees within three business days after the date the 
information enters the State Directory database. The State 
Directories must also furnish NDNH with information concerning 
the wages and unemployment compensation paid to individuals on 
a quarterly basis.
    NDNH provides more current earnings data than IVM, 
including quarterly wage data for up to eight quarters. 
Furthermore, NDNH's database also enjoys the advantage of being 
accessible online, whereas all computer matching information 
from IVM is transmitted to VA once a year on cartridge tapes. 
GAO reported that estimates from SSA indicate that VA could 
annually save $199 million by collecting and preventing 
overpayments through the use of NDNH, while only spending $23 
million on matching, following up on matches, and overpayment 
collection, yielding an estimated 8.7 to one benefit-to-cost 
ratio.
    Section 103 of S. 1163 would require VA to use HHS' NDNH to 
compare information provided by VA on individuals under 65 
years of age who are applicants for or recipients of VA pension 
benefits, parents' Dependency and Indemnity Compensation 
benefits, health-care services, and IU compensation with NDNH 
data on recent earnings, new hires, and unemployment. This 
requirement would take effect 270 days after the enactment of 
this bill and would expire on September 30, 2012.
    Under the Committee bill, VA would furnish to HHS the names 
and all other necessary information of those for whom the 
Secretary seeks verification of income. In turn, HHS would then 
disclose the results of the data match to VA. VA would then 
independently verify the information provided by HHS' NDNH 
database before any denial, reduction, or termination of 
benefits could take effect. VA would then be required to 
reimburse HHS for all costs incurred in performing data matches 
for VA under this authority.

             TITLE II--BURIAL AND MEMORIAL AFFAIRS MATTERS

Section 201. Provision of medallion or other device for privately 
        purchased gravemarkers

    Section 201 of the Committee bill, which is derived from 
section 4 of H.R. 797 as passed by the House of Representatives 
on March 21, 2007, would give the Secretary authority to 
furnish a medallion or other device that could be placed on a 
privately purchased headstone or grave marker in a private 
cemetery to denote veteran status.
    Current law, section 2306(d) of title 38, United States 
Code, requires the Secretary to furnish, on request, an 
appropriate headstone or marker for the grave of an eligible 
individual who died after September 10, 2001, and who is buried 
in a private cemetery, notwithstanding that the grave is marked 
by a headstone or marker furnished at private expense. Thus, in 
some cases, an individual's grave may have two markers--one 
privately-purchased and one furnished by VA.
    Section 201 of the Committee bill would authorize VA to 
furnish, on request, an appropriate medallion or other device 
in lieu of a headstone or marker, which would be affixed to an 
existing privately-purchased headstone or marker. This 
medallion or device would serve to signify the deceased's 
status as a veteran.
    The Committee is concerned that a bronze ``V'' as specified 
in H.R. 797 to denote veterans' status might be confused with 
the ``V'' device for valor used on military awards. After 
consultation with VA's National Cemetery Administration, the 
Committee decided that rather than specify a particular device, 
the Secretary should be required to design an appropriate 
medallion or other device to signify the deceased's status as a 
veteran.

Section 202. Increase in assistance for veterans interred in cemeteries 
        other than national cemeteries

    Section 202 of the Committee bill, which is derived from S. 
1266, would repeal the current two-year window within which 
States must file for reimbursement from VA for the interment or 
inurnment of unclaimed remains of deceased veterans. Section 
202 would also authorize $5 million to cover a portion of the 
operational and maintenance expenses of State cemeteries under 
criteria to be determined by VA.
    Under section 2408 of title 38, United States Code, VA, 
through the State cemetery grant program, is authorized to 
award grants to assist States in establishing, expanding, or 
improving veterans' cemeteries owned by such States. States, in 
turn, must agree to obtain suitable land for cemeteries 
financed with VA grant money, and meet operations and 
maintenance costs. To assist States in meeting some or all of 
its cemetery operations and maintenance expenses, section 
2303(b) of title 38 requires VA to pay to States a $300 plot 
allowance for the interment or inurnment of eligible veterans 
and reserve component members. In order to receive plot 
allowance revenue, States must submit claims within two years 
after the permanent burial or cremation of remains has 
occurred.
    The State cemetery grant program serves as a complement to 
VA's national cemetery system. VA's present policy is to build 
new national cemeteries in areas of the country with unserved 
veterans' populations of 170,000 or greater. Based largely on 
the results of a 2002 study that projected the need for 
veterans' cemeteries through 2020, VA embarked on the largest 
expansion of the national cemetery system since the Civil War. 
After this expansion is completed, it is unclear whether, or 
when, additional national cemeteries will be needed. It is 
apparent, then, that VA will need increasingly to partner with 
States to establish additional State cemeteries to meet 
veterans' burial needs in those parts of the country with 
unserved populations of less than 170,000.
    The need to incentivize greater participation by States in 
the State cemetery grant program was foreseen in a December 19, 
2000, VA-contracted report entitled An Assessment of the Burial 
Benefits Administered by the Department of Veterans Affairs. 
The report found that an option for better serving veterans and 
their families was to ``provide maintenance support to state 
veterans cemeteries.'' Another recommendation to incentivize 
State participation was to ``extend plot allowance eligibility 
for all veterans buried in a state veterans cemetery.''
    Section 202(a) of the Committee bill would permit States to 
submit claims to VA for plot allowance revenue for the 
interment or inurnment of unclaimed remains of deceased 
veterans, notwithstanding that such claims may be submitted 
more than two years after the permanent burial or cremation of 
the remains. Thus, under section 202(a), States which have 
sought, found, and provided dignified burials for the unclaimed 
remains of veterans, even if such remains had been cremated for 
more than two years, would be eligible to file claims for plot 
allowance revenue. Section 202(a) would take effect on October 
1, 2006, in recognition of the one state, Idaho, known to have 
already interred the unclaimed remains of veterans since the 
beginning of fiscal year 2007.
    Section 202(b) of the Committee bill would amend the State 
cemetery grant program to authorize VA to assist States with 
operating and maintaining cemeteries. Authorized assistance for 
operating and maintaining cemeteries under the grant program 
would be limited to $5 million per fiscal year, and VA would be 
required to prescribe regulations to carry out the provisions 
of section 202(b).

Section 203. Modification of authorities on provision of government 
        headstones and markers for burials of veterans at private 
        cemeteries

    Section 203 of the Committee bill, which is derived from S. 
1334, would permanently authorize VA to provide government 
headstones or markers for the privately-marked graves of 
veterans in private cemeteries. In addition, it would make 
retroactive VA's authority to provide headstones and markers 
for the privately-marked graves of veterans who died on or 
between November 1, 1990, and September 10, 2001.
    Current law, section 2306(d) of title 38, United States 
Code, requires the Secretary to furnish, on request, at no cost 
to the veteran or the veteran's family an appropriate headstone 
or marker for the grave of an eligible individual buried in a 
private cemetery, regardless, if it was privately-marked or 
not. This authority will expire on December 31, 2007. Section 
203 of the Committee bill would make this authority permanent.
    Prior to 1990, VA had authority to reimburse, up to the 
cost of a government headstone or marker, the costs incurred 
for a privately-furnished marker in a private cemetery or to 
provide a government headstone or marker if the grave was 
unmarked. The authority to reimburse for the cost of a 
privately-furnished marker in lieu of a government provided 
headstone or marker was repealed by section 8041 of Public Law 
101-508, the Omnibus Budget Reconciliation Act of 1990. From 
then until December 27, 2001, no authority existed for 
reimbursing the cost of a privately-furnished marker or for 
providing a government headstone or marker for privately-marked 
graves in private cemeteries.
    Section 502 of Public Law 107-103, the Veterans Education 
and Benefits Expansion Act of 2001, enacted on December 27, 
2001, established a five year pilot program that required VA to 
provide, upon request, a government marker for an eligible 
veteran buried in a private cemetery which was privately 
marked. The authority under section 502 was initially set to 
expire on December 31, 2006. This authority was revised on 
December 6, 2002, under section 203 of Public Law 107-330 when 
the date of eligibility was changed to September 11, 2001. The 
authority was further revised under section 461 of Public Law 
109-461 when the expiration date of the pilot program was 
extended until December 31, 2007. Under current law no 
authority exists to provide a government headstone or marker 
for an eligible veteran buried in a private cemetery where the 
grave was privately marked who died on or between November 1, 
1990, and September 10, 2001.
    Section 203 of the Committee bill is based upon 
recommendations made by VA in a February 2006 report to the 
Senate and House Committees on Veterans' Affairs, as required 
by Public Law 107-103, on the utilization of VA's authority to 
furnish headstones or markers in private cemeteries. In the 
report, VA endorsed the concept of having VA furnish government 
headstones and markers for privately marked graves at private 
cemeteries. It also recommended that the authority for 
providing a government headstone or marker for a privately 
marked grave at a private cemetery be made permanent and 
retroactive to 1990.

                      Committee Bill Cost Estimate

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the Committee, based on 
information supplied by the CBO, estimates that enactment of 
the Committee bill would, relative to current law, incur 
little, if any, cost. Enactment of the Committee bill would not 
affect direct spending or receipts, and would not affect the 
budget of state, local or tribal governments.
    The cost estimate provided by CBO follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, August 3, 2007.
Hon. Daniel K. Akaka,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1163, the Blinded 
Veterans Paired Organ Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Dwayne M. 
Wright.
            Sincerely,
                                         Peter R. Orszag, Director.
    Enclosure.
    S. 1163 contains provisions that would both increase and 
decrease spending for veterans' benefits. The bill would 
increase the disability benefits available for certain veterans 
with impaired vision and expand certain burial benefits. It 
also would allow the Department of Veterans Affairs (VA) to 
access the National Directory of New Hires (NDNH) database for 
income verification purposes. CBO estimates that enacting this 
legislation would decrease net direct spending for veterans' 
benefits by $12 million over the 2008-2012 period and by $10 
million over the 2008-2017 period.
    In addition, CBO estimates that implementing this 
legislation would have discretionary costs of $5 million in 
2008 and $25 million over the 2008-2012 period, subject to 
appropriation of the necessary amounts. Enacting S. 1163 would 
have no effect on receipts.
    S. 1163 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
State and local governments would benefit from grant assistance 
authorized by the bill; any costs they incur would be incurred 
voluntarily.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 1163 is shown in Table 1. The costs of 
this legislation fall within budget function 700 (veterans 
benefits and services).

             TABLE 1. ESTIMATED BUDGETARY IMPACT OF S. 1163
------------------------------------------------------------------------
                                      By fiscal year, in millions of
                                                 dollars--
                                 ---------------------------------------
                                   2008    2009    2010    2011    2012
------------------------------------------------------------------------
                      CHANGES IN DIRECT SPENDING\1\

Estimated Budget Authority......      -1      -1      -3      -4      -5
Estimated Outlays...............      -1      -1      -3      -4      -5

              CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level...       5       5       5       5       5
Estimated Outlays...............       5       5       5       5      5
------------------------------------------------------------------------
\1\ In addition to the direct spending effects shown here, enacting S.
  1163 would have effects on direct spending after 2012 (see Table 2).
  The estimated net reduction in direct spending sums to $12 million
  over the 2008-2012 period and $10 million over the 2008-2017 period.

    Basis of estimate: For this estimate, CBO assumes the bill 
will be enacted near the beginning of fiscal year 2008 and that 
the estimated amounts will be appropriated for each year.

Direct spending

    S. 1163 would reduce direct spending through a new income 
verification program and would increase direct spending for 
several benefit programs. On balance, CBO estimates that 
enacting this legislation would decrease net direct spending 
for veterans' benefits by $12 million over the 2008-2012 period 
and by $10 million over the 2008-2017 period (see Table 2).
    National Directory of New Hires. Section 103 would 
temporarily authorize VA to use the NDNH database maintained by 
the Department of Health and Human Services to verify veterans' 
income levels and their eligibility for certain veterans' 
benefits such as disability pensions and disability 
compensation for veterans whose disability rating is based on a 
finding of individual unemployability. That authority would 
expire on September 30, 2012. Currently, VA employs an income 
verification match with the Internal Revenue Service (IRS) for 
that purpose, but that authority expires on September 30, 2008. 
In addition, VA has recently re-instituted the use of an annual 
certification form that requires all individuals to certify 
their employment and income with VA.

                                      TABLE 2. COMPONENTS OF THE ESTIMATED CHANGES IN DIRECT SPENDING UNDER S. 1163
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Outlays in millions of dollars, by fiscal year--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2008    2009    2010    2011    2012    2013    2014    2015    2016    2017   2008-2012  2008-2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Directory of New Hires...................      -1      -2      -4      -6      -7      -5      -4      -3      -3      -2       -20        -37
Impairment of Vision Involving Both Eyes..........       *       1       1       2       2       2       3       3       3       3         6         21
Expansion of Special Monthly Compensation.........       *       *       *       *       *       *       1       1       1       1         1          4
Grave Markers.....................................       *       1       *       *       *       *       *       *       *       *         1          2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Changes.....................................      -1      -1      -3      -4      -5      -2       0       1       1       2       -12       -10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes.--Components may not sum to totals because of rounding. * = between -$500,000 and $500,000.

    According to VA, the current income verification match 
using IRS data yields, on average, about $5 million in new, 
incremental savings per year. CBO assumes the savings for each 
individual continues until that individual's death. Thus, if an 
income matching program yielded $2 million in savings in the 
first year, the following year would see that savings of $2 
million continue and even increase slightly due to cost-of-
living increases (but reduced by some number of deaths) plus an 
additional $2 million in new savings, for a total savings in 
the second year of about $4 million.
    The NDNH database would allow VA to analyze more recent 
wage and income data than the IRS data, which is up to a year 
and a half old when the data comparison is run. However, 
according to a Government Accountability Office (GAO) report, 
unlike the IRS income match, the NDNH data does not include 
complete information on independent contractors, self-employed 
individuals, subcontractors, or individuals who provide 
services such as child-care for private homes. According to the 
Department of Labor, about 15 percent of the total workforce 
would fall into one of those categories.
    As another method to reduce improper benefit payments, VA 
has recently re-instituted the use of an annual certification 
form that requires all individuals receiving means-tested 
veterans benefits to certify their employment and income with 
VA. Use of this annual certification was dropped in the late 
1990s and VA reports that the number of cases where individuals 
have been discovered to have received these means-tested 
benefits fraudulently has since increased significantly.
    Based on VA's renewed use of the annual certification of 
employment form and the NDNH database's lack of ability to 
account for the total workforce population in the income match, 
CBO estimates that the incremental savings from utilizing the 
NDNH database would be about $2 million per year, or slightly 
less than half of the current $5 million in annual savings that 
VA has been achieving using IRS data. As noted above, these 
savings would continue in subsequent years, with cost-of-living 
and mortality adjustments. This provision would take effect 270 
days after enactment of the bill. Therefore, CBO estimates that 
enacting section 103 would reduce direct spending by about $1 
million in 2008, $20 million over the 2008-2012 period, and $37 
million over the 2008-2017 period.
    Impairment of Vision Involving Both Eyes. For veterans with 
a service-connected vision impairment in one eye, current law 
requires that they must be diagnosed as blind in both eyes for 
vision impairment that was not caused by military service to be 
considered for the purposes of disability compensation. Section 
102 would allow certain veterans who receive veterans' 
disability compensation for a severe, service-related 
impairment of vision in one eye (the impairment would have to 
reduce visual acuity to 20/200 or less or reduce the peripheral 
field to 20 degrees or less) to receive additional compensation 
if their other eye develops a comparable, nonservice-related, 
vision impairment. That change in eligibility standards would 
increase the amount of compensation paid to those veterans. In 
total, CBO estimates that enacting section 102 would increase 
direct spending for veterans' compensation by less than 
$500,000 in 2008, $6 million over the 2008-2012 period, and $21 
million over the 2008-2017 period.
    Veterans Already Receiving Disability Compensation for 
Vision Impairment. The Department of Veterans Affairs reports 
that, as of September 30, 2006, it was paying disability 
compensation for about 125,000 incidences of service-connected, 
eye-related disability among veterans. This figure, however, 
does not reflect the number of unique veterans who receive 
disability compensation for eye-related disabilities, since a 
veteran may exhibit more than one eye-related disability and 
thus be counted more than once in the reported data. VA also 
reports, as of that same date, that there were about 45,000 
unique veterans receiving disability compensation primarily due 
to eye disease or impairment of vision. VA data does not 
indicate whether these veterans were receiving such 
compensation for impairments in one or both eyes.
    Based on information from VA, CBO assumes, for this 
estimate, that the population of roughly 45,000 veterans 
receiving disability compensation primarily because of eye 
disease or impairment of vision would most likely constitute 
the bulk of veterans that would be affected by enactment of 
this bill. Of that population, CBO estimates that about 1,150 
veterans would qualify for increased benefits under section 
102. That estimate reflects the exclusion of eye diseases that 
would likely not cause impairment of vision (such as the loss 
of eyebrows), and veterans rated as either 100 percent disabled 
or less than 70 percent disabled (ratings that would not be 
eligible for an increase under the bill--a veteran with a 
visual acuity of 20/200 or less in both eyes or a peripheral 
field of 20 degrees or less would be rated at least 70 percent 
disabled). Finally, while VA data does not indicate whether a 
veteran's disability rating considered conditions in one or 
both eyes, VA indicated that between 30 percent and 50 percent 
of the veterans currently on the rolls for eye disabilities 
received a service-connected rating for both eyes. Based on 
that information, CBO estimates that 40 percent of the affected 
population are currently receiving disability compensation for 
service-connected disabilities in both eyes, and therefore, 
would have ratings that would be unaffected by enactment of 
section 102. Thus, CBO estimates that about 700 veterans in 
2008 might qualify for an increase in their disability rating 
under this bill.
    Veterans receiving disability compensation are, on average, 
57 years old. According to information from the National 
Institutes of Health and a report on vision loss prepared by 
researchers at the University of Washington, the most common 
causes of impairment of vision in persons age 40 and older are 
age-related maculopathy, cataracts, and glaucoma. Those 
organizations report that about 30 percent of persons over the 
age of 40 experience increased impairment of vision due to one 
or more of those conditions. Because VA does not track the 
progression of vision impairment in the veterans population, 
CBO assumes that veterans experience vision impairment from 
these same conditions at that same rate.
    Thus, CBO estimates that about 200 of the roughly 700 
veterans discussed above would likely experience additional 
vision loss that could qualify them for a disability rating 
increase under the bill. Using data provided by VA, CBO 
estimates that about 15 percent of veterans who are already 
receiving disability compensation apply for a reevaluation of 
their rating each year. After adjusting for claims processing 
times, CBO estimates that just over 30 of those veterans would 
receive an increase in their disability rating in 2008 and that 
number would reach 200 veterans by 2017.
    In addition, based on VA data, CBO estimates that about 150 
veterans who currently have a disability rating for eye disease 
or vision impairment between 20 percent and 60 percent (20 
percent is the lowest rating a veteran can receive for a 
service-connected visual acuity of 20/200 in one eye) would 
apply to have their rating reevaluated sometime over the 2008-
2014 period and would have the nonservice-disabled eye 
evaluated with a visual acuity of 20/200 or less or a 
peripheral field of 20 degrees or less.
    The disability rating for a veteran receiving disability 
compensation for a visual acuity of 20/200 or less or a 
peripheral field of 20 degrees or less in both eyes is 70 
percent and in 2006 the average annual compensation payment for 
that rating was $22,326. Using data from VA about the average 
rating increase for veterans currently on the disability 
compensation rolls with a 70 percent rating, CBO expects that 
the average disability rating for veterans qualifying under the 
bill would increase to 80 percent and that the average annual 
disability compensation payment would increase by $2,388 
(expressed in 2006 dollars). For veterans with a disability 
rating between 20 percent and 60 percent, and with a visual 
acuity in one eye of 20/200 or less or a peripheral field of 20 
degrees or less who come in for a reevaluation, CBO expects 
that they would now qualify under section 102 and their average 
disability ratings would increase to 70 percent. After 
adjusting for cost-of-living increases and information from VA 
on individuals moving to 70 percent on the disability rolls, 
CBO estimates that enacting this provision would increase 
direct spending for veterans' disability compensation for 
veterans currently on the rolls by less than $500,000 in 2008, 
about $6 million over the 2008-2012 period, and $19 million 
over the 2008-2017 period.
    New Accessions. According to information from VA, in 2006 
there were roughly 2.7 million veterans receiving veterans' 
disability compensation and less than 2 percent of those 
veterans were rated disabled primarily due to eye disease or 
vision impairment. Using discharge data from the Department of 
Defense, information from VA on new compensation cases that 
enter the rolls at 70 percent disabled, the information and 
assumptions above regarding common eye disabilities for persons 
over age 40, and the rate at which veterans return to be 
reevaluated, CBO also estimates that, over the 10-year period, 
about 150 veterans out of the impairment for the first time 
each year would be eligible for a higher disability rating 
under this bill.
    Assuming that disability ratings for veterans qualifying 
under the bill would increase from 70 percent to 80 percent, 
that the average annual disability compensation payment would 
increase by $2,388 (expressed in 2006 dollars), and that 
payments are adjusted for cost-of-living increases, CBO 
estimates that enacting this provision would increase direct 
spending for veterans' disability compensation for veterans 
coming onto VA's disability compensation rolls (i.e., for new 
accessions after enactment) by less than $500,000 in 2008, $1 
million over the 2008-2012 period, and $2 million over the 
2008-2017 period.
    Expansion of Special Monthly Compensation. Section 101 
would expand the number of veterans with impaired vision who 
could qualify to receive a special monthly compensation (SMC) 
payment from VA. Under current law, a veteran who has been 
rated for both service-connected total blindness with 5/200 
visual acuity or less and bilateral deafness rated at 60 
percent or more (eligible for a combination rating of 100 
percent) is eligible for an SMC payment of $4,313 per month. 
Section 101 would reduce the threshold for visual impairment 
from 5/200 or less to 20/200 or less.
    A veteran rated for service-connected total blindness with 
20/200 visual acuity or less and bilateral deafness rated at 60 
percent or more is eligible for a combined rating of 80 
percent. Based on information from VA on the number of veterans 
rated at 80 percent or greater for visual impairment who are 
probably not receiving SMC (about 330 veterans) and the 
percentage of the veterans population with hearing impairment 
(about 2 percent), CBO estimates that fewer than 10 veterans 
currently on the rolls would become eligible for SMC based upon 
both their visual impairment of 20/200 or less and a bilateral 
hearing loss rated at 60 percent or more.
    Using data provided by VA, CBO estimates that about 15 
percent of veterans who are already receiving disability 
compensation apply for a reevaluation of their rating each 
year. After adjusting for claims processing times, CBO 
estimates that very few veterans would receive an increase in 
disability rating over the next couple of years, and that 
number would increase to about 10 veterans by 2017.
    Also, section 101 would increase the number of new 
accessions to the disability compensation rolls who would be 
eligible for SMC. According to information from VA, of the 
roughly 2.7 million veterans receiving veterans' disability 
compensation, less than 2 percent were rated disabled primarily 
due to eye disease or vision impairment. Using discharge data 
from the Department of Defense, information from VA on new 
compensation cases that enter the rolls with a disability 
rating of 80 percent or greater, and the estimated percentage 
of veterans with both a visual impairment and hearing loss (2 
percent), CBO estimates that under section 101, about 20 new 
veterans would become eligible for SMC over the 2008-2017 
period.
    In 2006 dollars, a veteran rated at 80 percent would 
receive a monthly payment of $2,068 ($24,800 annually), on 
average. The SMC for a person with 20/200 or less visual acuity 
and a hearing loss rated at 60 percent or greater would be 
$4,313 per month ($51,800 annually) for an annual difference of 
about $27,000. After adjusting for cost-of-living increases and 
mortality rates for veterans currently on the rolls and for new 
accessions, CBO estimates that enacting this provision would 
increase direct spending for veterans' disability compensation 
by less than $500,000 in 2008, about $1 million over the 2008-
2012 period, and $4 million over the 2008-2017 period.
    Grave Markers. Section 203 would allow VA to provide a 
marker or headstone to be placed on a marked grave or other 
appropriate location in a private cemetery to commemorate a 
veteran's military service for those veterans who were buried 
after November 11, 1990. Under current law, veterans buried in 
a private cemetery are eligible for a second marker or 
headstone only if they were buried after September 11, 2001.
    Section 203 also would indefinitely extend the period 
during which a marker or headstone could be requested. The 
authority for VA to provide government headstones or markers to 
veterans buried in private cemeteries currently expires on 
December 31, 2007.
    Based on VA projections regarding veterans' death rates and 
the number of veterans who will be buried in private 
cemeteries, CBO estimates that about 20,000 requests for 
headstones or markers would be submitted over the 2008-2017 
period. The estimate also reflects information from a VA study 
that showed that only 27 percent of private cemeteries allow 
second markers and that less than 5 percent of those eligible 
would participate in this program. According to VA, a marker or 
headstone costs about $100 on average. CBO estimates that this 
provision would result in an increase in spending for burial 
benefits of $1 million over the 2008-2012 period and $2 million 
over the 2008-2017 period.
    Medallions for Graves in Private Cemeteries. Section 201 
would allow VA to provide a medallion or other memorial 
representation to be attached to a headstone or marker of an 
eligible individual at a private cemetery instead of a VA-
provided headstone or marker. According to VA, the cost for 
medallions and headstones or markers are similar. Therefore, 
CBO expects there would be no significant change in direct 
spending under this section.
    Reimbursement for Interment Costs. Under current law, any 
claim for reimbursement for interment costs must be made within 
two years of the burial or cremation of the body. Section 202 
would repeal the two-year limit during which a state can 
request a reimbursement for interment costs related to the 
unclaimed remains of a veteran and would make the repeal 
retroactive to October 1, 2006. Based on information from VA 
regarding the average number of reimbursement claims that are 
filed for interment of unclaimed remains each year and the cost 
($300) of the interment payment to a state, CBO expects any 
increase in direct spending to be insignificant.

Spending subject to appropriation

    Section 202 would authorize VA to provide up to $5 million 
per year for establishing, expanding, improving, operating, and 
maintaining state veterans cemeteries. CBO estimates that 
implementing section 202 would cost $5 million in 2008 and $25 
million over the 2008-2012 period, subject to appropriation of 
the estimated amounts.
    Intergovernmental and private-sector impact: S. 1163 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The bill would benefit state and local 
governments that operate and maintain cemeteries for veterans. 
Any cost those governments incur would be incurred voluntarily.
    Previous CBO estimate: On March 20, 2007, CBO transmitted a 
cost estimate for H.R. 797 as ordered reported by the House 
Committee on Veterans' Affairs on March 15, 2007. Sections 102 
and 103 of S. 1163 are similar to sections 1 and 2 of H.R. 797, 
and the estimated costs for those provisions are unchanged from 
our previous estimate.
    Estimate prepared by: Federal Costs: Dwayne M. Wright; 
Impact on State, Local, and Tribal Governments: Lisa Ramirez-
Branum; Impact on the Private Sector: Victoria Liu.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee on Veterans' 
Affairs has made an evaluation of the regulatory impact that 
would be incurred in carrying out the Committee bill. The 
Committee finds that the Committee bill would not entail any 
regulation of individuals or businesses or result in any impact 
on the personal privacy of any individuals and that the 
paperwork resulting from enactment would be minimal.

                 Tabulation of Votes Cast in Committee

    In compliance with paragraph 7 of rule XXVI of the Standing 
Rules of the Senate, the following is a tabulation of votes 
cast in person or by proxy by members of the Committee on 
Veterans' Affairs at its June 27, 2007 meeting.
    On that date, the Committee, by voice vote, ordered S. 1163 
to be reported favorably to the Senate.

                             Agency Report

    On May 9, 2007, Daniel L. Cooper, Under Secretary for 
Benefits of the Department of Veterans Affairs, appeared before 
the Committee at a hearing on pending benefits legislation and 
submitted testimony on, among other bills, S. 1163, the Blinded 
Veterans Paired Organ Act of 2007. Excerpts from this statement 
are reprinted below:

Statement of Daniel L. Cooper, Under Secretary for Benefits, Department 
                          of Veterans Affairs

    Mr. Chairman and Members of the Committee, thank you for 
the opportunity to testify today on several bills of great 
interest to veterans. I will comment today only on the 
provisions of the bills that affect the Department of Veterans 
Affairs (VA).

           *       *       *       *       *       *       *


                                S. 1163

    Section 2 of S. 1163, the ``Blinded Veterans Paired Organ 
Act of 2007,'' would liberalize the eligibility for 
compensation and SAH [Specially Adapted Housing] benefits for 
veterans in certain cases of impairment of vision involving 
both eyes. Under current law (38 U.S.C. Sec. 1160(a)), a 
veteran with service-connected blindness in one eye and 
nonservice-connected blindness in the other eye may be 
compensated as though the combination of both disabilities were 
service connected. Section 2(a) would replace the entitlement 
requirement of ``blindness'' with impairment of vision in each 
eye of visual acuity of 20/200 or less or of a peripheral field 
of vision of 20 degrees or less (the definition of ``legal 
blindness'' adopted by all 50 states and the Social Security 
Administration (SSA)). Also, under current law (38 U.S.C. 
Sec. 2101(b)), a veteran entitled to compensation for 
``permanent and total service-connected disability'' due to 
blindness in both eyes with 5/200 visual acuity or less is 
entitled to SAH assistance. Section 2(b) would replace the 
entitlement requirement of ``blindness * * * with 5/200 visual 
acuity or less'' with a requirement of visual acuity of 20/200 
or less or of a peripheral field of vision of 20 degrees or 
less.
    Subject to Congress' enactment of legislation offsetting 
the increased costs associated with the enactment of the 
provision, VA supports the amendment that would be made by 
section 2(a) because it would treat visual impairment in both 
eyes similarly to the way hearing loss in both ears is treated 
under current law. The amendment would be consistent with a 
prior amendment to section 1160(a) pertaining to special 
consideration for hearing loss in both ears. Before that 
amendment, a veteran with service-connected total deafness in 
one ear and nonservice-connected total deafness in the other 
ear could be compensated as though the combination of both 
disabilities were service connected. In 2002, section 103 of 
Public Law 107-330 amended section 1160(a)(3) to replace the 
requirement of ``total deafness'' with ``deafness compensable 
to a degree of 10 percent or more'' for the service-connected 
impairment and ``deafness'' for the nonservice-connected 
hearing loss.
    However, VA opposes the amendment that would be made by 
section 2(b) of S. 1163, primarily because it would treat 
visual impairment differently from the other disability that 
warrants SAH assistance under section 2101(b). The other 
disability that warrants such assistance is anatomical loss or 
loss of use of both hands. Not only do anatomical loss and loss 
of use of both hands warrant a higher schedular rating than the 
degree of visual impairment that section 2(b) would substitute 
for the current criterion of blindness, they also warrant 
special monthly compensation. Furthermore, section 2(b) would 
create an inconsistency in the requirements for SAH assistance 
under section 2101(b)(2). The overriding requirement for 
assistance is that a veteran have a ``permanent and total'' 
service connected disability of the specified nature. Visual 
acuity of 20/200 or less or a peripheral field of vision of 20 
degrees or less, even when present in both eyes, does not 
warrant a total disability rating.
    VA estimates that enactment of section 2(a) of S. 1163 
would result in a benefit cost of $893,000 in the first year 
and $11.4 million over 10 years. VA estimates that enactment of 
section 2(b) would result in a benefit cost of $480,000 for 48 
new SAH grants in the first year. The cost of additional SAH 
grants is less than $500,000 annually and is therefore 
insignificant. There are no administrative costs associated 
with these provisions.
    Section 3 of S. 1163 would require the use of the National 
Directory of New Hires (NDNH) for income-verification purposes 
for certain veterans benefits. It would require the Department 
of Health and Human Services (HHS) to compare information 
provided by VA on individuals under 65 years of age who are 
applicants for or recipients of VA pension benefits (under 
chapter 15 of title 38, United States Code), parents' DIC 
benefits (under section 1315 of title 38, United States Code), 
health-care services (under section 1710(a)(2)(G), (a)(3), and 
(b) of title 38, United States Code), and compensation paid at 
the rate of 100 percent based solely on unemployability (under 
chapter 11 of title 38, United States Code) with information in 
the NDNH and disclose information in that directory to VA 
solely for the purpose of determining an individual's 
eligibility for such benefits or the amount of such benefits to 
which the individual is entitled if the individual is under 65 
years old. VA would be required to reimburse HHS for the costs 
incurred by HHS in providing this information. VA would be 
responsible for providing notice to applicants for or 
recipients of VA benefits whose information is being disclosed 
and for independently verifying information relating to 
employment and income from employment if VA terminates, denies, 
suspends, or reduces any benefit or service as a result of 
information obtained from HHS. Furthermore, an individual would 
have the opportunity to contest any findings made by VA when 
verifying the information. VA's expenses related to use of this 
directory for income-verification purposes would be paid from 
amounts available for the payment of VA compensation and 
pension. The authority for the income verification would expire 
on September 30, 2012.
    The NDNH, which was established as part of the Federal 
Parent Locator Service by 42 U.S.C. Sec. 653, provides a 
national directory of employment, wage, and unemployment 
compensation information to facilitate employment and income 
verification. Under 42 U.S.C. Sec. 653a(g)(2), State 
Directories of New Hires are required to furnish information 
regarding newly hired employees within 3 business days after 
the date information is entered into the State Directory of New 
Hires. In addition, it requires that, on a quarterly basis, 
State Directories of New Hires must furnish to the NDNH 
information concerning the wages and unemployment compensation 
paid to individuals.
    The Privacy Act allows agencies to disclose records 
maintained in systems of records to other agencies pursuant to 
computer data matching programs authorized by law. All computer 
data matching programs must be formalized by a written 
agreement that specifies, among other things, the justification 
for the program and the anticipated results, including a 
specific estimate of any savings.
    As currently drafted, section 3 of this bill would make the 
data match between VA and HHS mandatory, except to the extent 
that HHS determined that it would interfere with the effective 
operation of part D of title IV of the Social Security Act, 
``Child Support and Establishment of Paternity.'' Accordingly, 
section 3 could conceivably require VA to enter a computer data 
matching program for which little or no justification exists 
and for which cost savings are unlikely. The decision to enter 
into a computer matching agreement under section 3 should be 
within the sound discretion of VA, instead of a mandatory 
requirement. In addition, any administrative expenses 
associated with data matching should be paid from VA 
discretionary administration accounts and not from mandatory 
entitlement accounts.
    VA currently matches data with the Internal Revenue Service 
(IRS) and the SSA. As a result of these matches, VA obtains 
unearned and earned income data concerning its needs-based 
applicants and beneficiaries. VA's authority to use the NDNH 
for VA health-care services would not substantially improve the 
current income verification activities of VHA. It would add an 
interim match step into the current process VHA has established 
for income matching, which would not be definitive for the 
majority of veterans for whom matching is required. While the 
data may be more current than existing match data from the IRS 
and SSA, it is not a comprehensive income reporting source, 
particularly since it does not include unearned income. VA 
believes that the cost of adding such a match to the income 
verification business process and information and technology 
support systems is unlikely to be recouped by any substantial 
gain to the Government from integrating such a match into the 
income verification process. VA does not support enactment of 
section 3 as it applies to VA health-care services because VA 
believes it is unnecessary.
    VA's authority to use the NDNH to determine eligibility for 
certain other VA monetary benefits or the amount of such 
benefits for individuals under 65 years of age would have 
limited benefit with respect to eligibility determinations for 
pension benefits and parents' DIC and continued eligibility for 
individual unemployability benefits. Although eligibility for 
pension and parents' DIC depends on income, currently available 
statistics show minimal overpayments due to new employment. 
Furthermore, the average age of recipients of pension and 
parents' DIC is more than 65 years, and the only other source 
of income for most individuals who receive a pension is Social 
Security benefits. In addition, with respect to continued 
eligibility for individual unemployability, regulations require 
a showing of sustained employment before adjusting individual 
unemployability awards. Thus, the utility of income 
verification for individuals receiving individual 
unemployability is not as great.
    VA's authority to use the NDNH would result in an 
additional expense for VA, and we believe that the cost of 
using the NDNH is unlikely to be recouped by any gain that 
might result from eligibility determinations with respect to 
pension benefits and parents' DIC, and continued eligibility 
for individual unemployability benefits. However, significant 
savings could be realized from use of the NDNH database as an 
initial screening tool to make initial eligibility 
determinations for individual unemployability. Through its 
matches with SSA and IRS, VA has discovered cases where 
individual unemployability was awarded based on incorrect data 
furnished by the applicant. Because the NDNH data is more up-
to-date, VA might discover some errors through the NDNH match 
up to three years earlier than it would have discovered the 
error if it relied on SSA and IRS matches.
    VA estimates that enactment of section 3 of S. 1163 would 
result in a cost to reimburse HHS for comparing our income data 
with data from the NDNH of $1 million in the first year and $4 
million over 5 years, after which time the agreement would 
expire. VA also estimates that section 3 would result in 
benefit savings of $940,000 in the first year and $16.7 million 
more in 10 years, resulting in an overall savings of $12.7 
million. There are no other administrative costs associated 
with this provision.

           *       *       *       *       *       *       *

    On July 25, 2007, the Committee received a letter from R. 
James Nicholson, Secretary of the Department of Veterans 
Affairs, stating the Department's views on Senate bills S. 1266 
and S. 1334. The letter is reprinted below:

                                                     July 25, 2007.
Hon. Daniel K. Akaka,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: I am pleased to provide the Committee 
with the views of the Department of Veterans Affairs (VA) on 
two bills: S. 1266, 110th Cong., the ``Veterans' Dignified 
Burial Assistance Act of 2007,'' and S. 1334, 110th Cong., a 
bill ``to make permanent the authority to furnish government 
headstones and markers for graves of veterans at private 
cemeteries, and for other purposes.'' For the reasons explained 
below, with respect to S. 1266, we defer taking a position on 
subsections (a) and (b) of section 2 and do not support section 
2(c). We support S. 1334.

                                S. 1266

    Section 2(a) of S. 1266 would increase from $300 to $400 
the amount of reimbursement allowed for the costs of a burial 
plot or interment for a veteran who is eligible for burial in a 
VA national cemetery but is buried in a state or private 
cemetery. This plot or interment allowance was last increased 
from $150 to $300 by Public Law 107-103 in 2001. Section 2(b) 
of the bill would nullify the two-year time limitation in 38 
C.F.R. Sec. 3.1604(d)(2) for states to file claims for the plot 
or interment allowance as it applies to claims in connection 
with interment of a deceased veteran's unclaimed remains. 
Section 2(b) would be retroactively effective as of October 1, 
2006.
    VA has embarked upon an independent evaluation of VA's 
memorial benefits program. The main objectives of this 
evaluation are to determine the extent to which VA's memorial 
benefits program is achieving its expected outcomes and to 
identify the program's impact on the eligible veteran 
population. The evaluation will assess the appropriateness of 
VA's current burial benefits based on the data obtained and 
beneficiary needs. We expect to complete this program 
evaluation by April 2008. We believe it would be premature to 
take a position on subsections (a) and (b) of section 2 of S. 
1266 before we have completed our memorial benefits program 
evaluation. Accordingly, we defer taking a position on these 
provisions until we have had an opportunity to review the 
results of this program evaluation.
    Enactment of section 2(a) of the bill would result in costs 
of $7.2 million for Fiscal Year (FY) 2008, $37 million for the 
five-year period FY 2008 through FY 2012, and $77 million for 
the ten-year period FY 2008 through FY 2017. Enactment of 
section 2(b) of the bill would result in insignificant costs.
    Section 2(c) of the bill would authorize VA to provide up 
to $5 million annually in grants to states or tribal 
organizations for operating and maintaining state veterans' 
cemeteries or veterans' cemeteries on trust land owned by, or 
held in trust for, tribal organizations. It would also require 
VA, not later than 180 days after enactment, to prescribe 
regulations to carry out the amendments. VA does not support 
using the State Cemetery Grant Program to operate and maintain 
state veterans' cemeteries or tribal organization cemeteries. 
(For convenience, we refer below only to grants to states and 
state veterans' cemeteries, but our rationale applies also to 
grants to tribal organizations and their veterans' cemeteries.)
    The State Cemetery Grant Program is intended to complement 
the national cemetery system in providing a dignified burial 
place reasonably close to where veterans live. Through the 
grant program, states establish, expand, or improve cemeteries 
in areas where there are no plans to create an open national 
cemetery. Under current law, VA may fund 100 percent of certain 
costs related to the establishment, expansion, or improvement 
of a state veterans' cemetery.
    Historically, states have been solely responsible for all 
operational and maintenance activities at state veterans' 
cemeteries. Federal grants to operate and maintain state 
veterans' cemeteries may create ambiguities in the states' 
responsibility for the operation and maintenance of state 
cemeteries. Also, because operating costs are recurring, it is 
unclear upon what basis the grants would be awarded or how the 
grants would be distributed. Funds obligated for this new 
purpose could otherwise be used for state cemetery grants in 
the existing program or to help fund operation and maintenance 
costs for VA national cemeteries. Authorizing Federal grants to 
fund operation and maintenance could discourage states that 
have already received grants from fulfilling their commitments 
to operate and maintain their cemeteries, or could encourage 
future grant applicants to inadequately plan for funding the 
operation and maintenance of their cemeteries because of the 
availability of Federal grants to cover those costs.
    Enactment of section 2(c) of this bill would result in 
costs of $5 million for FY 2008, $25 million for the five-year 
period FY 2008 through FY 2012, and $50 million for the ten-
year period FY 2008 through FY 2017.

                                S. 1334

    Section 1(a) of S. 1334 would make permanent VA's authority 
to provide a Government-furnished headstone or marker for the 
private-cemetery grave of an eligible veteran regardless of 
whether the grave has been marked at private expense. VA's 
current authority to do so will expire on December 31, 2007. 
Section 1(b) would authorize VA to furnish this benefit for a 
private-cemetery grave of a veteran who died on or after 
November 1, 1990.
    Under current law, if a veteran died before September 11, 
2001, VA is authorized to furnish a Government headstone or 
marker only if the veteran's grave is unmarked. Although this 
law has allowed VA to begin to meet the needs of families who 
view the Government-furnished marker as a means of honoring and 
publicly recognizing a veteran's military service, VA is now in 
the difficult position of having to deny a benefit based solely 
on when a veteran died.
    Moreover, the law has never precluded the addition of 
privately purchased headstone to a grave after placement of a 
Government-furnished marker, resulting in double marking. 
However, when a private marker was placed in the first 
instance, a Government marker may not be provided if the 
veteran died before September 11, 2001. We believe this creates 
an arbitrary distinction disadvantaging families who promptly 
obtain a private marker.
    From October 18, 1979, until November 1, 1990, with an 
enactment of the Omnibus Budget and Reconciliation Act of 1990, 
VA paid a headstone or marker allowance to those families who 
purchased a private headstone or marker, in lieu of furnishing 
a Government headstone or marker. Those families all had the 
opportunity to benefit from the VA-marker program. S. 1334 
would benefit the families of veterans who died between 
November 1, 1990, and September 11, 2001. The extension of the 
authority to cover deaths since November 1, 1990, will assist 
VA in providing uniform benefits to veterans, regardless of the 
date of their deaths, and will meet public expectations for 
honoring veterans and their service to the Nation.
    Enactment of S. 1334 would result in costs of $630,000 for 
FY 2008, $2.88 million for the five-year period FY 2008 through 
FY 2012, and $5.47 million for the ten-year period FY 2008 
through FY 2017.
    The Office of Management and Budget has advised that there 
is not objection to the submission of this report from the 
standpoint of the Administration's program.
            Sincerely yours,
R. James Nicholson.

           *       *       *       *       *       *       *


                        Changes in Existing Law

    In compliance with rule XXVI paragraph 12 of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new matter is printed in 
italic, existing law in which no change is proposed is shown in 
roman).

                      TITLE 38--VETERANS' BENEFITS

                       PART II--GENERAL BENEFITS


   CHAPTER 11--COMPENSATION FOR SERVICE-CONNECTED DISABILITY OR DEATH


             Subchapter II--Wartime Disability Compensation


SEC. 1114. RATES OF WARTIME DISABILITY COMPENSATION.

           *       *       *       *       *       *       *


    (o) if the veteran, as the result of service-connected 
disability, has suffered disability under conditions which 
would entitle such veteran to two or more of the rates provided 
in one or more subsections (l) through (n) of this section, no 
condition being considered twice in the determination, or if 
the veteran has suffered bilateral deafness (and the hearing 
impairment in either one or both ears is service connected) 
rated at 60 percent or more disabling and the veteran has also 
suffered service-connected total blindness with [5/200] 20/200 
visual acuity or less, or if the veteran has suffered service-
connected total deafness in one ear or bilateral deafness (and 
the hearing impairment in either one or both ears is service 
connected) rated at 40 percent or more disabling and the 
veteran has also suffered service-connected blindness having 
only light perception or less, or if the veteran has suffered 
the anatomical loss of both arms so near the shoulder as to 
prevent the use of prosthetic appliances, the monthly 
compensation shall be $4,313;

           *       *       *       *       *       *       *


             Subchapter VI--General Compensation Provisions


SEC. 1160. SPECIAL CONSIDERATION FOR CERTAIN CASES OF LOSS OF PAIRED 
                    ORGANS OR EXTREMITIES.

    (a) * * *
          (1) [blindness] impairment of vision in one eye as a 
        result of service-connected disability and [blindness] 
        impairment of vision in the other eye as a result of 
        non-service-connected disability not the result of the 
        veteran's own willful [misconduct;] misconduct if--
                  (A) the impairment of vision in each eye is 
                rated at a visual acuity of 20/200 or less; or
                  (B) the peripheral field of vision for each 
                eye is 20 degrees or less;

           *       *       *       *       *       *       *


CHAPTER 23--BURIAL BENEFITS

           *       *       *       *       *       *       *



SEC. 2306. HEADSTONES, MARKERS, AND BURIAL RECEPTACLES.

           *       *       *       *       *       *       *


    (d) * * *
          [(3) The authority to furnish a marker under this 
        subsection expires on December 31, 2007.]
          [(4)] (3) The headstone or marker furnished under 
        this subsection shall be the headstone or marker 
        selected by the individual making the request from 
        among all the headstones and markers made available by 
        the Government for selection.
          [(5)] (4) The Secretary may, upon request, furnish in 
        lieu of a headstone or marker authorized by this 
        subsection a medallion or other device of a design 
        determined by the Secretary to signify the deceased's 
        status as a veteran to be affixed to a headstone or 
        marker purchased at private expense.

           *       *       *       *       *       *       *


CHAPTER 24--NATIONAL CEMETERIES AND MEMORIALS

           *       *       *       *       *       *       *



SEC. 2408. AID TO STATES FOR ESTABLISHMENT, EXPANSION, AND IMPROVEMENT 
                    OF VETERANS' CEMETERIES.

    (a)(1) Subject to subsection (b) of this section, the 
Secretary may make grants to any State to [assist such State in 
establishing, expanding, or improving veterans' cemeteries 
owned by such State.] assist such State in the following:
          (A) Establishing, expanding, or improving veterans' 
        cemeteries owned by such State.
          (B) Operating and maintaining such cemeteries.
    (2) Any such grant may be made only upon submission of an 
application to the Secretary in such form and manner, and 
containing such information, as the Secretary may require.
    (3) * * *
    (b) [Grants under this section] Grants under this section 
for the purposes described in subsection (a)(1)(A) shall be 
subject to the following conditions:
                  (1) The amount of [a grant under this 
                section] such a grant may not exceed--
                          (A) in the case of the establishment 
                        of a new cemetery, the sum of: (i) the 
                        cost of improvements to be made on the 
                        land to be converted into a cemetery; 
                        and (ii) the cost of initial equipment 
                        necessary to operate the cemetery; and
                          (B) in the case of the expansion or 
                        improvement of an existing cemetery, 
                        the sum of: (i) the cost of 
                        improvements to be made on any land to 
                        be added to the cemetery; and (ii) the 
                        cost of any improvements to be made to 
                        the existing cemetery.
          (2) If the amount of [a grant under this section] 
        such a grant is less than the amount of costs referred 
        to in subparagraph (A) or (B) of paragraph (1), the 
        State receiving the grant shall contribute the excess 
        of such costs over the grant.
          (3) If a State that has received [a grant under this 
        section] such a grant to establish, expand, or improve 
        a veterans' cemetery ceases to own such cemetery, 
        ceases to operate such cemetery as a veterans' 
        cemetery, or uses any part of the funds provided 
        through such grant for a purpose other than that for 
        which the grant was made, the United States shall be 
        entitled to recover from such State the total of all 
        grants made under this section to such State in 
        connection with such cemetery.
    (c) * * *
    (d)(1) In addition to the conditions specified in 
subsections (b) and (c), any grant made to a State under this 
section to assist such State in establishing, expanding, or 
improving a veterans' cemetery, or in operating and maintaining 
a veterans' cemetery, shall be made subject to the condition 
specified in paragraph (2).

           *       *       *       *       *       *       *

    (e)(1) Amounts appropriated to carry out this section shall 
remain available until expended. If all funds from a grant 
under this section have not been utilized by a State for the 
purpose for which the grant was made within three years after 
such grant is made, the United States shall be entitled to 
recover any such unused grant funds from such State.
    (2) In any fiscal year, the aggregate amount of grants 
awarded under this section for the purposes specified in 
subsection (a)(l)(B) may not exceed $5,000,000.
    (f)(1) The Secretary may take grants under this subsection 
to any tribal organization to assist the tribal organization in 
establishing, expanding, or improving veterans' cemeteries, or 
in operating and maintaining veterans' cemeteries, on trust 
land owned by, or held in trust for, the tribal organization.

           *       *       *       *       *       *       *


               PART IV--GENERAL ADMINISTRATIVE PROVISIONS


CHAPTER 53--SPECIAL PROVISIONS RELATING TO BENEFITS

           *       *       *       *       *       *       *


Sec.  5320.  Use of National Directory of New Hires for income 
          verification purposes.

           *       *       *       *       *       *       *


SEC. 5320. USE OF NATIONAL DIRECTORY OF NEW HIRES FOR INCOME 
                    VERIFICATION PURPOSES.

    (a) Information from National Directory of New Hires.--(1) 
The Secretary shall furnish to the Secretary of Health and 
Human Services information in the custody of the Secretary on 
individuals under the age of 65 who are applicants for or 
recipients of benefits or services specified in subsection (d) 
for comparison with information on such individuals in the 
National Directory of New Hires maintained by the Secretary of 
Health and Human Services pursuant to section 453 of the Social 
Security Act (42 U.S.C. 653). The Secretary shall furnish the 
information on a quarterly basis or at such other intervals as 
may be determined by the Secretary.
    (2) The Secretary shall furnish information under paragraph 
(1) with respect to any individual only if doing so is 
essential to determine the individual's eligibility for 
benefits and services specified in subsection (d) or the amount 
of benefits specified in paragraphs (1), (2), and (4) of 
subsection (d), to which the individual is entitled.
    (3)(A) The Secretary of Health and Human Services shall, in 
cooperation with the Secretary and in accordance with this 
subsection--
          (i) compare information in the National Directory of 
        New Hires with information furnished pursuant to 
        paragraph (1); and
          (ii) disclose information in that directory to the 
        Secretary for the purposes specified in this 
        subsection.
    (B) The Secretary of Health and Human Services may make a 
disclosure in accordance with subparagraph (A) only to the 
extent that the Secretary of Health and Human Services 
determines that such disclosure does not interfere with the 
effective operation of the program under part D of title IV of 
the Social Security Act (42 U.S.C. 651 et seq.).
    (4) The Secretary may use information resulting from a data 
match pursuant to this subsection only for the purpose of 
determining eligibility for benefits and services specified in 
subsection (d), and the amount of benefits specified in 
paragraphs (1), (2), and (4) of that subsection, for indivudals 
under the age of 65.
    (5) The Secretary shall reimburse the Secretary of Health 
and Human Services for the additional costs incurred by that 
Secretary in furnishing information under this subsection. Such 
reimbursement shall be at rates that the Secretary of Health 
and Human Services determines to be reasonable (and shall 
include payment for the costs of obtaining, verifying, 
maintaining, and comparing the information).
    (b) Notification to Beneficiaries.--The Secretary shall 
notify each applicant for, or recipient of, a benefit or 
service specified in subsection (d) that income information 
furnished by the applicant to the Secretary may be compared 
with information obtained by the Secretary from the Secretary 
of Health and Human Services under subsection (a). The 
Secretary shall periodically transmit to recipients of such 
benefits additional notices under this subsection.
    (c) Independent Verification Required.--The Secretary may 
terminate, deny, suspend, or reduce any benefit or service 
described in subsection (d) by reason of information obtained 
from the Secretary of Health and Human Services under 
subsection (a) only if the Secretary takes appropriate steps to 
verify independently information relating to employment and 
income from employment.
    (d) Covered Benefits and Services.--The benefits and 
services specified in this subsection are the following:
          (1) Needs-based pension benefits provided under 
        chapter 15 of this title or under any other law 
        administered by the Secretary.
          (2) Parents' dependency and indemnity compensation 
        provided under section 1315 of this title.
          (3) Health-care services furnished under subsections 
        (a)(2)(G), (a)(3), and (b) of section 1710 of this 
        title.
          (4) Compensation paid under chapter 11 of this title 
        at the 100 percent rate based solely on unemployability 
        and without regard to the fact that the disability or 
        disabilities are not rated as 100 percent disabling 
        under the rating schedule.
    (e) Opportunity to Contest Findings.--The Secretary shall 
inform the individual of the findings made by the Secretary on 
the basis of verified information under subsection (c), and 
shall give the individual an opportunity to contest such 
findings in the same manner as applies to other information and 
findings relating to eligibility for the benefit or service 
involved.
    (f) Source of Funds for Administration of Section.--The 
Secretary shall pay the expenses of carrying out this section 
from amounts available to the Department for the payment of 
compensation and pensions.
    (g) Termination of Authority--The authority of the 
Secretary to obtain information from the Secretary of Health 
and Human Services under subsection (a) expires on September 
30, 2012.